For the past three years, the news emanating from most of Europe's pay-TV outfits has been consistently grim.

Financial cutbacks, bankruptcies and mergers in countries such as Germany, Italy, Spain and France hit the film industry hard as the leading pay-TV players cut back on their investment in movies.

However, a new report suggests that the film industry might now have grounds for cautious optimism.

The report predicts that European pay-television revenues will triple in the next five years from Euros 22 billion to Euros 77bn.

The revenue growth will be partly attributed to household subscriptions across the continent rising from 40m to 68m.

The key driver, however, will be an 850% increase in interactive TV commerce levels from a current low of Euros 2.4bn to more than Euros 30bn by 2008.

The report also says that Europe's largest economy, Germany, will make rapid progress in pay-TV with its current 6.3% of TV households subscribing to pay-TV set to grow to 36.2% in the next five years. The finding is good news for Germany's sole pay-TV platform, Premiere, which was last year taken over by private equity specialist Permira (Screen Daily, Dec 20, 2002).

The report, European Pay-TV Forecasts by David Brown and published by International Marketing Reports, also shows that Britain will be the biggest pay-TV market in Europe with a five-fold increase in revenues from Euros 4.1bn to Euro 20bn.

UK pay-TV penetration will reach 58% of TV households from the current 38%, which is eclipsed only by Scandinavian countries Finland (63.6%), Denmark (74.1%) and Sweden (79.8%).

The report also suggests that free-to-air TV will continue to lose share to pay-TV, that the strongest growth will be in services provided by broadband and Video-on-Demand and that other big winners will be sports and film rights holders.

"Sport and movies are still the so-called 'Killer Content'", said Brown."They are quite simply the only content that the majority of subscribers will pay for and therefore they are the lifeblood of many of the big subscription operations. Even where advertising and T-Commerce boost revenues, it is often on the back of having such sought after content."